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Economic Background For Investment In Thailand Part 2
The First National Economic Development Plan continually emphasized development in Thailand. The Second National Economic Development Plan continually emphasized the development of infrastructure in such areas as communication and transportation. The Third Plan was named, the National Economic Development Plan, as it combined social economic development along with economic development in efforts to improve the quality of life for all Thais.
The Fourth Economic Development Plan was instituted during the economic recovery period and mans significant Economic and Social Development plan, although there was worldwide economic fluctuation, Thailand concentrated on eradicating rural poverty, increasing domestic productivity and developing the eastern Seaboard area. The Sixth National Economic and Social Development Plan could be lebeled the golden period as the Thai economic growth in every sector was substantially increased. Currently, the Seventh Economic Development and Social Development Plan emphasized equitable income distribution and environmental awareness in order to conserve sacred environmental resources.
Throughout the process of performing the seven National Economic and Social Development Plans, new goals of development to accomplish were growth, stability, employment, income distribution and balance of trade. Each of the seven plans had contributed to outcomes of one or another of those goals. Determining the effectiveness of Thailand: national development is a long process in which the better quality of living and well being of the nation are concerned.
The first plan (1961-1966) : A new era of economic development
The first plan can be divided into two periods, between 1961 to 1963 and between 1964 to 1966: however, these time frames are more for illustrative purposes as no actual National Economic Development Plan had been officially declared. The Plan consisted of a variety of development projects: moreover, statistics and data necessary for economic planning were not available to the planning agencies at that time.
The First Plan succeeded in setting the Thai economy onto a new track. Economic growth increased by 6.1 percent a year. The economy became more balanced by reducing the size of the agricultural sector from 38.3 percent of GDP in 1961 to 33.9 percent in 1966. Although the agricultural sector was a major part of the GDP. This sector become more diversified by producing more new crops.
Thai international Trade traditionally consisted of exporting a small amount of commodities and importing consumer goods. Seventy percent of exports consisted of rice, rubber, tin and teak, but in 1960, these efforts were reduced to 52.6 percent. Imported consumer goods were reduced from 35.0 percent of total imports in 1960 to 25.5 percent in 1966, while the import of capital goods increased from 24.6 percent of total imports in 1960 to 30.8 in 1966.
The Second Plan (1967-1971): The Foundation of the Infrastructure
The Thai economy was now in a new era of development since the initiation of the First Plan. Toward the end of the First Plan.
Thailand had an increase in political conflict. Both internally and externally. These conflicts led to higher government expenditures for bureaucratic administration and for strengthening of internal affairs in order to protect Thailand from external threat. The budget for economic development declined from 30.3 percent of the government expenditure during the First Plan to 17.4 percent in the Second Plan.
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The Second Plan (1967-1971): The Foundation of the Infrastructure
The Thai economy was now in a new era of development since the initiation of the First Plan. Toward the end of the First Plan. Toward the end of the First Plan. Thailand had an increase in political conflict. Both internally and externally. These conflicts led to higher government expenditures for bureaucratic administration and for strengthening of internal affairs in order to protect Thailand from external threat. The budget for economic development declined from 30.3 percent of the government expenditure during the First Plan to 17.4 percent in the Second Plan.
The Second Plan. Also of 5 years duration. Continually emphasized the development of infrastructure, especially improvement of transportation and communications. The distribution of economic development to the rural regions was included in the Second Plan. Especially in the remote and draught-stricken areas.
The effectiveness of development projects in the First Plan combined with increases in population caused an expansion of communities. This in turn led to insufficient public services in many communities. This in turn led to insufficient public services in many communities, for example, public health services provided by the government were inadequate to meet public needs. Another social problem which became a concern at the beginning of the Second Plan was education. There were not many people possessing degrees in Thailand at this time. Apparently the education system did not serve the needs of the labour market. More over, the size of the labour market in the rural area was found to be poorly matched to the size of the labour force. This caused an increase in the rate of unemployment and a waste of human resources which blocked economic development in the long run.
The Second Plan was much more detailed than the First Plan as far as financial planning data for development projects were concerned. The primary objectives of the Second Plan were as follows:
1. The need for social development to co-exist with economic development.
2. The need for human resource development so that the education system was consistent with the needs of the labour market.
3. A reduction of the trade deficit by supplementing the import substitution industries.
4. Assisting the private sector so that it could play a major part in the development of industry, commerce and services, as well as strengthening the relationship between government and private sectors.
5. Pushing forward with economic growth, and economic and financial stabilization.
The results of the Second Plan were expected to raise the GDP by 8.5 percent per year, manufacturing 10.9 percent, construction 11.0 percent, transportation and communications 11 percent and banking 17 percent, transportation and communications 11 percent and banking 17 percent. It was expected that per capital income would rise to 3,900 Baht per year. The anticipated increase in income would be generated by two major factors:
1. The expansion of investment expenditures in government and private sectors.
2. The expansion of international trade and international cooperation.
During this Second Plan, the government’s developmental policy which focused initially on economy had changed to include social development into an “ Economic and Social Development Plan”.
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Economic Background for Investment in Thailand
Until quite recently, Thailand had a reputation for being primarily a country which relied heavily on commodity exports, it used to be the world’s largest rice exporter.
However, this is no longer true, the agricultural exports used to represent more than 40 percent of the country’s export in the mid-80s. Now its share of the total export has dropped to only around 20 percent. The pace of industrialization and the growing proportion of exports taken up by manufactured goods reflect the increasing volume of investment which is going into industrial development. Thailand has enjoyed consistent economic growth for more than three decades whereby during the ‘60s and ‘70s average annual growth exceeded 7 percent, an impressive rate by any standards. But only over the last half decade or so has it become the real industrial powerhouse of the region
Economic growth in the year since 1987 has run at over 10 percent per annual, a rate which made the country the fastest growing in the region and perhaps the world. With the growth has come and influx of foreign investment, growth of the service sector, especially tourism, reduced unemployment and manageable levels of inflation. It has also brought significant changes in the structure of the economy. The principal change has been a general drift away from the agricultural sector which has shrunk in overall importance to the manufacturing sector whose share of overall production growth from 21.5 percent in 1986 increased to more than 30 percent in 1991. Its share looks set to increase still further in the years ahead.
Economic Development through National Development Plan
The economic development in Thailand began about 30 years ago when the country, for the first time, formulated and adopted the National Economic Development Plan in 1961. Before that period economic development was implemented without planning or direction. The National Development Plan became the main tool in achieving the target of the strategies in National development. Various development programs and projects were identified and coordinated umbrella, and human and financial resources were mobilized and accelerated the national development during each specific 5 year period.
The Royal Thai Government declared a “National Economic Development Plan” as the guidelines for economic development under three objectives. First, the Thai economy would be pushed forward to expand under the guidelines of the “National Economic Development Plan” Secondly, the Thai economy would develop without much restrictions and constraints. Finally, private sector would play a major role in investment and industrial development.
The economic development plan was accomplished by incorporation of the plan into the government and private sectors, as well as accounting for foreign investment and trade. This was done by analyzing the development of capital, natural resources technology and human resources in Thailand.
The First National Economic Development Plan continually emphasized development in Thailand. The Second National Economic Development Plan continually emphasized the development of infrastructure in such areas as communication and transportation. The Third Plan was named, the National Economic Development Plan, as it combined social economic development along with economic development in efforts to improve the quality of life for all Thais.
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